Commercial Real E tate Melbourne: Inve ting Guide & Tip

Few decisions feel as big as buying your first commercial property in Melbourne. Whether you’re a local investor or foreign buyer, the market offers both opportunity and complexity, and this guide answers your top questions using data from JLL (real estate advisory) and KPMG (economic research) along with government sources.

Commercial properties for sale (Melbourne VIC): 689 · Just Commercial cumulative experience: 100+ years · PAA questions answered in this guide: 12

Six key metrics, one pattern: Melbourne’s commercial property market is recovering unevenly but showing clear strength in industrial and build-to-rent sectors, while office and retail face ongoing adjustments.

Is it wise to invest in commercial property?

What are the risks and rewards?

• Reward: total returns across office, retail, and industrial reached 7.3% in the September quarter 2025, the first positive quarter for all three classes since mid-2023 (KPMG (audit & advisory)).
• Risk: interest rate rises have compressed cap rates, making financing costlier. Melbourne’s office sector still faces uncertainty from hybrid work, though strong CBD absorption in early 2025 was driven by corporate centralisation (JLL).
• Industrial offers the tightest supply: vacancy below 3.5%, fuelled by e-commerce and onshoring demand (JLL).

Current market conditions in Melbourne

Melbourne’s population growth is creating opportunities across build-to-rent (54% of Australia’s pipeline per JLL), industrial, and retail. J.P. Morgan (investment bank) describes the 2026 outlook as bright, with multifamily and industrial leading. The catch: financing costs and regulatory changes remain headwinds. For a buyer in Melbourne, the reward is strongest in industrial and build-to-rent; the risk is highest in older office assets without retrofit upgrades.

The implication: sectors with tighter supply and population tailwinds offer the clearest upside, while office assets will reward selective, well-located purchases.

How much do commercial real estate agents make in Melbourne?

Salary ranges for agents

• No official published average exists for Melbourne, but industry data from recruitment platforms suggests base salaries for commercial agents typically range between AUD 70,000 and AUD 120,000, with top performers earning well over AUD 200,000 through commissions.
• Differences from residential: commercial agents often earn a higher base but rely more on large, infrequent deals. The average commercial agent in Melbourne reportedly closes fewer transactions per year but at higher values than residential counterparts (realestate.com.au (property listings)).

Commission structures

Commissions in Melbourne’s commercial market typically run 1%–3% of the sale price for agency representation, higher for leasing deals. According to Just Commercial (broker network), agencies with over 100 years of combined experience often command premium commissions because they bundle valuation and tenant placement services. The unclear part: exact commission splits between agent and agency are rarely disclosed publicly.

The pattern: compensation is highly variable and tied to deal volume, so agents targeting high-turnover industrial assets tend to outperform.

What is the biggest problem in commercial real estate?

Interest rates and financing

• Rising interest rates have increased financing costs across all sectors. KPMG notes that the September quarter 2025 was the first time since June 2023 that all three core asset classes delivered positive returns, reflecting the deep impact of the rate cycle.
• Cap rate compression remains a concern, particularly for office assets in secondary locations.

Supply chain and construction issues

Construction delays and material cost inflation have slowed new supply, especially in industrial and build-to-rent. JLL says tight industrial vacancy (below 3.5%) reflects both strong demand and constrained new delivery. The implication: rents are rising faster than operating costs, but only for properties that are already built and leased.

What this means: investors who can secure financing for industrial assets are in a strong bargaining position, while office owners must focus on tenant retention.

What suburbs are expected to boom in Melbourne?

Growth corridors

• The Fishermans Bend urban renewal area, Melbourne’s largest brownfield development, is expected to deliver thousands of residential and commercial lots over the next 20 years (Live in Melbourne (Victorian Government)).
• Suburbs along the new Suburban Rail Loop (Cheltenham, Box Hill, Glen Waverley) will see transport-linked commercial growth, though timelines align with 2030s completion.
• Industrial zones in Truganina, Laverton North, and Craigieburn benefit from proximity to Western Fwy and freight hubs.

Infrastructure projects driving demand

The Metro Tunnel and level crossing removals are reshaping commuting patterns. JLL reports that population growth is creating opportunities across all sectors, but the strongest signals are in suburbs with direct rail access and land availability. The catch: predictions depend on government funding schedules, which can shift. For an investor, the safest bet is a site within 1 km of a new station or freeway interchange.

The catch: these booms are heavily dependent on government infrastructure schedules, so investors should plan for long holds.

Are property prices falling in Melbourne?

Residential vs commercial price trends

• Residential values in Melbourne have softened slightly, with median house prices dropping around 4% in 2024 according to realestate.com.au (property listings). Commercial has been more resilient: total returns of 7.3% in the September quarter 2025 (KPMG) suggest prices are holding, especially in industrial.
• Office transaction volumes have dipped, but prime CBD assets still trade at tight yields (5%–6%).

Current market indicators

JLL notes that shopping centre vacancy dropped from 7.4% in Q4 2021 to 4.1% in Q4 2024 – a clear sign that retail property values are recovering. J.P. Morgan says limited new supply in retail is creating tailwinds. The trade-off: office values in fringe suburbs are under more pressure than prime CBD assets, creating a two-speed market.

Can a foreigner buy a house in Melbourne?

Foreign investment rules for commercial property

• Foreign buyers can purchase commercial property in Australia, but must apply for approval from the Foreign Investment Review Board (FIRB) unless the property is valued under a certain threshold (AUD 8 million for vacant commercial land, AUD 13 million for developed commercial).
• Unlike residential, there is no blanket ban on foreign ownership of commercial real estate. However, stamp duty surcharges apply: in Victoria, foreign buyers pay an additional 8% on top of normal stamp duty for residential property, but commercial rates vary and are generally lower (Live in Melbourne (Victorian Government)).

FIRB approval process

The FIRB application is mandatory for acquisitions above the threshold. Processing takes 30–60 days for standard cases. Foreign investors must also register for Australian Tax Office (ATO) reporting on vacant land. The Victorian Government also imposes annual land tax surcharges on foreign-owned land. The implication: foreign buyers face higher upfront costs and ongoing compliance, but the commercial sector is far more accessible than residential.

What this means: foreign investors should focus on commercial assets to avoid the steep residential surcharge, but must plan for FIRB timelines.

How to buy commercial property in Melbourne – step by step

1. Clarify your goals: Are you after passive income (build-to-rent, net-leased retail) or capital growth (industrial land, development sites)? Your asset type determines location strategy.
2. Check your finances: Lenders typically require a 30%–40% deposit for commercial property. Obtain pre-approval from a commercial lender – KPMG notes that rising rates mean stress-tested borrowing capacity at 2–3% above current rates.
3. Choose a suburb: Use the growth corridors above (Fishermans Bend, Suburban Rail Loop stops, Western Industrial Belt). Cross-reference with realcommercial.com.au (property listings) for availability.
4. Engage a commercial agent: Look for agents with certifications like Certified Practising Valuer (CPV) or membership in the Property Council of Australia. Interview at least two agents – commission rates vary.
5. Due diligence: Order a building inspection, zoning check (Vic Planning Schemes), and environmental audit. For foreign buyers, start FIRB application 60 days before settlement.
6. Negotiate and settle: Commercial contracts often have longer settlement periods (60–90 days). Include a finance clause and a due diligence condition. Engage a solicitor experienced in Victorian property law.

The pattern: each step builds on the previous, and foreign buyers should lead with FIRB timing.

The takeaway: investors have solid data on current conditions, but future movements hinge on policy and market shifts.

Expert perspectives

“Melbourne is benefiting from population growth that is creating opportunities across property sectors, including build-to-rent, office, industrial, and retail.”

— JLL research note, What’s driving the Melbourne real estate investment market

“Uncertainty across the three core commercial sectors is at low levels relative to historical norms.”

— KPMG, Commercial Property Market Update, September 2025

“The retail sector is benefiting from limited new supply and good tailwinds.”

— J.P. Morgan, Commercial Real Estate Trends 2026

“Foreign buyers need to apply for FIRB approval and be aware of higher stamp duty costs in Victoria.”

— Live in Melbourne (Victorian Government)

For Melbourne investors, the choice is clearer than it sounds. The industrial and build-to-rent sectors are firing on all cylinders; office and retail require careful location selection. Foreign buyers can enter the market but must factor in FIRB timelines and extra stamp duty. The pattern across all sectors: properties near infrastructure projects perform best. For a first-time investor in Melbourne, the concrete step is to secure financing now, target industrial land in the Western growth corridor, and hold for the long-term growth from population migration and e-commerce expansion.

Frequently asked questions